In a landscape where cryptocurrency exchanges are scrutinized for their security practices, WazirX, one of India’s prominent crypto exchanges, has taken a noteworthy step towards transparency by unveiling its proof-of-reserves (PoR) report. Announced on October 25, this detailed report reveals that over 40% of customer assets are held with external exchanges. This move, as stated by the WazirX team, is an effort to boost confidence among users by allowing them to verify the exchange’s holdings independently.
According to WazirX’s PoR report dated October 24, the platform manages approximately $298.17 million across 242,000 wallets. Notably, $157.01 million is secured on-chain, while a significant $126.91 million is stored on third-party exchanges. This external allocation, raising eyebrows within the crypto community, has yet to be clarified as the exchanges housing these funds have not been explicitly named. Speculation suggests that these could potentially be well-known platforms such as Bybit, KuCoin, and Huobi, although WazirX co-founder Nischal Shetty has indicated that they are in talks to reveal these names only if they receive approval.
Among WazirX’s extensive portfolio, Bitcoin remains the jewel, with 1,140 BTC valued at around $77.9 million. The report highlights other significant holdings, including $26.7 million tied up in assets on the Tron blockchain, predominantly in TRX, with a smaller portion allocated to Tether’s USDT. Additionally, WazirX has acknowledged $14.25 million stored in less liquid assets, adding another layer to its financial complexity.
In light of the recent cyberattack that led to substantial client fund losses, WazirX is urgently seeking a new custodian capable of offering fund insurance. This strategic pivot aims to further protect client assets and minimize losses in future security breaches. The exchange’s commitment to risk management is underscored by its proactive approach to custody solutions, showcasing a growing trend among crypto firms to prioritize user safety, especially in turbulent times.
The challenges faced by WazirX are rooted in a significant breach from July, which resulted in the unfortunate loss of $235 million in client funds. In response to this incident, withdrawals for both cryptocurrencies and Indian Rupees (INR) were temporarily halted, creating a crisis for users accessing their assets. While INR withdrawals have since resumed, the exchange continues to navigate the suspension of crypto withdrawals as it fortifies its reserves. The ongoing collaboration with the Financial Intelligence Unit and governmental bodies highlights WazirX’s dedication to resolving the fallout from the attack, aiming to restore trust and streamline user access to funds effectively.
WazirX’s transparency initiative and its steps toward enhancing security protocols offer a glimpse into the future of cryptocurrency exchanges. By unveiling its proof-of-reserves and actively seeking solutions to bolster fund security, the platform exhibits an understanding of the importance of user trust in the volatile crypto market. As WazirX grapples with past challenges and embarks on this mission for transparency and security, the exchange may set a precedent for others in the industry to follow.
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